Summary

Retirement Savings Contributions Credit

Taxpayers who contributed to a retirement plan or an IRA may be eligible for the nonrefundable retirement savings contributions credit. Be sure to ask the taxpayer if IRA contributions were made. Carefully review the taxpayer's Form(s) W-2 for pre-tax retirement plan contributions and accurately input the amounts into the tax software. The software calculates the retirement savings credit based on the amount that is input. The amount of the credit is determined by filing status, adjusted gross income, and the taxpayer's qualified retirement contributions. Form 8880 is used to calculate the credit.

Credit for the Elderly or the Disabled

Elderly individuals, age 65 or older, and individuals under age 65 who retired on permanent and total disability may be able to claim a special nonrefundable credit if they are U.S. citizens or resident aliens. Few taxpayers qualify for this credit because most taxpayers' social security benefits exceed the income limits.

The Volunteer Resource Guide (Tab G) provides a flowchart for determining basic eligibility and a quick reference table of income and social security limits. Schedule R is used to calculate the credit.

Residential Energy Credits

There are changes to the nonbusiness energy property credit for tax year 2011; the amounts are less than what was allowed in previous years.

Residential energy credits are available to taxpayers for making energy-saving improvements to their home. Form 5695, Part I, is used to claim the nonbusiness energy property credit. Form 5695, Part II, Residential Energy Efficient Property Credit, is out of scope for the volunteer program. Refer to the Volunteer Resource Guide (Tab G) for key points on Energy Credits.